U.S. jobless claims fall unexpectedly, tumbling to a 28 year low

U.S. economy’s brightening prospects boosted by sharp acceleration in factory activity this month

Upbeat economic data supports an interest rate hike next month

Claims for state unemployment benefits to a seasonally adjusted 232,000 for the week ended May 13

WASHINGTON, U.S. - The Labour Department has released figures revealing that state unemployment benefits decreased 4,000 to a seasonally adjusted 232,000 for the week ended May 13.

This, the department pointed out pushed claims close to levels last seen in 1973 - a 28 and a half year low.

Claims have now decreased for three consecutive weeks, pointing to rapidly shrinking labor market slack.

Indicating a healthy labour market, the department said claims have now been below 300,000, for 115 straight weeks.

This, it further noted was the longest such stretch since 1970, when the labor market was smaller.

Meanwhile, hiring has remained steady, despite the first quarter's slow growth.

In April, employers added 211,000 jobs as the unemployment rate fell to a 10-year low of 4.4 percent.

Suggesting further job gains this month, reports noted that claims fell 11,000 between the April and May survey periods. The economy is said to have created 211,000 jobs in April after adding only 79,000 positions in March.

Meanwhile, the country’s economy received a further boost by other data released on Thursday, indicating a sharp acceleration in factory activity in the mid-Atlantic region in May.

This year, the job gains have averaged 185,000 a month, growing at the same pace as in 2016.

In the first three months of the year, the economy grew by just 0.7 percent, however, there are signs it will expand more quickly in the current quarter.

The upbeat economic data has led analysts to believe that an interest rate hike might be likely next month.

However, they also pointed out that the Federal Reserve's decision will also depend on the state of financial markets, that have been rattled in recent days by Trump administration scandals.

While the U.S. dollar rose against a basket of currencies after the data was released, U.S. short-term interest rates futures turned lower.

U.S. stock index futures were mostly weaker and prices of U.S. Treasuries were trading lower.

The U.S. central bank had raised rates in March and during the announcement, it signalled two more rate hikes in 2017.

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